Equity release can provide funding for care at home

03 March 2009 / by Rachael Stiles

Pensioners who need long-term care but who want to stay in their homes could use equity release as a funding solution, Key Retirement Solutions has suggested.

Finding a solution to financing long term care is becoming an increasing problem, KRS said, due to the increasing number of people who are over the state pensionable age.

An accommodation shortage means that some people who seek long term care sometimes have to move miles from their friends and family to find a bed, when they could receive the care they need in the comfort of their own home.

Therefore, more people could remain at home and still get the care they need with the help of equity release, the company said.

Or, if they do require residential care, then the money released from their home could be used to cover these costs, whilst allowing their spouse to remain in their home.

There is currently around £500billion of mortgage-free equity tied up in the properties of homeowners over the age of 65, so for those who seek long-term care, without having to move house or be separated from their spouse by moving into residential care, "equity release provides a very real solution".

In Kensington and Chelsea, for example, the shortage of beds in residential care homes is clear. Key Retirement Solutions found that there are 16.4 beds per 1,000 residents over the age of 65, and in Westminster the situation is even worse, with 12.1 beds per 1,000 over 65 residents.

"Many pensioners who require care do not want to move away from their family and friends in order to receive it. Often people have lived in the area for a long time and the upheaval can prove very stressful and upsetting." said Dean Mirfin, group director at Key Retirement Solutions equity release.

"Equity release provides a solution for those who do not wish to move - by releasing cash tied up in their property, depending on the amount released, pensioners can then choose to either purchase care privately or stay in their own home and receive domiciliary care."

Mr Mirfin added that "While equity release can provide a certain element of financial freedom in retirement it is not always the right solution for everyone," and those interested in releasing cash from their home should seek independent financial advice before committing to a policy.